Future-Oriented Statement of Operations

Future-Oriented Statement of Operations
For the year ending March 31
(in thousands of dollars)
Email and Workplace Technology 169,017 132,548
Data Centres 746,529 629,098
Telecommunications 685,576 733,171
Cyber and IT Security 185,997 148,680
Customer Relationships and Service Management 116,564 167,830
Brokered Public Cloud Services 1,256 -
Internal Services 183,770 175,105
Total expenses 2,088,709 1,986,432
Sale of goods and services 454,915 454,915
Miscellaneous revenues 534 677
Revenues earned on behalf of Government (11,555) (11,556)
Total revenues 443,894 444,036
Net cost of operations before government funding and transfers 1,644,815 1,542,396

The accompanying notes form an integral part of this Future-Oriented Statement of Operations.

Notes to the Future-Oriented Statement of Operations
For the year ending March 31

1. Methodology and Significant Assumptions

The Future-Oriented Statement of Operations has been prepared on the basis of government priorities and departmental plans as described in the Departmental Plan.

The information in the forecast results for fiscal year 2017-18 has been calculated on the basis of available departmental authorities, considering this, actual expenditures and revenues are expected to be higher, aligned with actual revenues collected. Forecasts have been made for the planned results for fiscal year 2018-19.

The main assumptions underlying the forecasts are as follows:

  1. the Department’s activities will remain substantially the same as in the previous year
  2. expenses and revenues, including the determination of amounts internal and external to the government, are based on past experience. The general historical pattern is expected to continue
  3. planned results include operations for which there is reasonable assurance that appropriate authorities will be obtained

These assumptions were adopted as at January 31, 2018.

2. Variations and Changes to the Forecast Financial Information

Although every attempt has been made to forecast final results for the remainder of 2017-18 and for 2018-19, actual results achieved for both years are likely to differ from the forecast information presented, and this variation could be material.

In preparing this Future-Oriented Statement of Operations, Shared Services Canada (SSC) has made estimates and assumptions about the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are based on past experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances, and are continually evaluated.

Factors that could lead to material differences between the Future-Oriented Statement of Operations and the historical statement of operations include:

  1. the timing and the amount of acquisitions and disposals of tangible capital assets which may affect gains, losses and amortization expense
  2. the implementation of new collective agreements
  3. economic conditions, which may affect both the amount of revenue earned and the collectability of receivables
  4. other changes to the operating budget, such as new initiatives or technical adjustments later in the fiscal year

After the Departmental Plan is tabled in Parliament, SSC will not be updating the forecasts for any changes in financial resources made in ensuing supplementary estimates. Variances will be explained in the Departmental Results Report.

3. Summary of Significant Accounting Policies

The Future-Oriented Statement of Operations has been prepared using the Government of Canada’s accounting policies in effect for fiscal year 2017-18, and is based on Canadian public sector accounting standards. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian public sector accounting standards.

Significant accounting policies are as follows:

a) Expenses

Expenses are recorded on the accrual basis.

Expenses for SSC’s operations are recorded when goods are received or services are rendered, including services provided without charge for accommodation, employer contributions to health and dental insurance plans and legal services, which are recorded as expenses at their estimated cost. Vacation pay and compensatory leave, as well as severance benefits, are accrued, and expenses are recorded as the benefits are earned by employees under their terms of employment.

Expenses also include provisions to reflect changes in the value of assets and liabilities, including contingent liabilities, to the extent the future event is likely to occur and a reasonable estimate can be made.

Expenses also include amortization of tangible capital assets, which are capitalized at their acquisition cost. Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset.

b) Revenues

Revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place.

Funds that have been received in advance are recorded as deferred revenue, provided SSC has an obligation to other parties for the provision of goods, services or the use of assets in the future.

Revenues that are non-respendable are not available to discharge SSC’s liabilities. While the President is expected to maintain accounting control, he has no authority regarding the disposition of non-respendable revenues. As a result, non-respendable revenues are considered to be earned on behalf of the Government of Canada and are therefore presented in reduction of SSC’s gross revenues.

4. Parliamentary Authorities

SSC is financed by the Government of Canada through parliamentary authorities. Financial reporting of authorities provided to SSC differs from financial reporting according to generally accepted accounting principles because authorities are based mainly on cash flow requirements. Items recognized in the Future-Oriented Statement of Operations in one year may be funded through parliamentary authorities in prior, current or future years. Accordingly, SSC has different net cost of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables:

a) Reconciliation of net cost of operations to requested authorities

  (in thousands of dollars)
Net cost of operations before government funding and transfers 1,644,815 1,542,396
Adjustments for items affecting net cost of operations but not affecting authorities:    
Amortization of tangible capital assets (185,895) (240,673)
Services provided without charge by other government departments (82,184) (81,330)
Decrease (increase) in vacation pay and compensatory leave 1,455 1,024
Decrease (increase) in employee future benefits (1,934) 903
Refunds and adjustments to previous years’ expenses 14,186 14,022
Respendable revenue 1,274 1,274
Other 526 667
Total items affecting net cost of operations but not affecting authorities (252,572) (304,113)
Adjustments for items not affecting net cost of operations but affecting authorities:    
Acquisitions of tangible capital assets 486,311 260,078
Payments on lease obligations for tangible capital assets 53,258 43,802
Increase (decrease) in prepaid expenses (401) 3,979
Total items not affecting net cost of operations but affecting authorities 539,168 307,859
Requested authorities 1,931,411 1,546,142

b) Requested authorities

  (in thousands of dollars)
Requested authorities:
Vote 1 – Operating expenditures 1,363,213 1,206,729
Vote 5 – Capital expenditures 486,311 260,078
Statutory amounts 81,887 79,335
Requested authorities 1,931,411 1,546,142

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